Abstract

With greater importance given to the climate change debate, energy has slowly attracted the complete attention of the whole world. As a matter of fact, the main strategies identified by international bodies and institutions aimed at addressing the climatic issues faced by our planet constantly involve energy: both in terms of reducing the use of sources that increase emissions, and in terms of using them more efficiently. The energy sector can be roughly divided into renewable energy, on the one hand, and fossil fuels, on the other. The former category is at the core of all the main international agreements regarding climate change and current environmental concerns: the increasing exploitation of renewable energy sources has become an urgent matter and a possible route to reach this goal is to facilitate trade and exchange in renewable energy goods, services, and technologies, through trade liberalization. Another possible route to achieve the global goal of reducing CO2 emissions and protect the environment requires a diminished use of fossil fuels, such as coal and oil. As far as petroleum is concerned, the relevant market is completely controlled by a few actors, gathered in the Organization of Petroleum Exporting Countries (OPEC), which set prices and quotas as they please. It is clear from this picture that a central and fundamental role is played by international trade rules. Trade liberalization in renewable energy needs to be consistent with international trade rules, and so do OPEC’s practices. As we will see in section 2, energy is not explicitly covered by the Agreements of the World Trade Organization (WTO), which makes interpretation of this sector extremely important. Section 3 focuses on the possibility to use and interpret WTO Agreements in favor of the deployment and diffusion of renewable energies, in order to contribute to mitigation of and adaptation to climate change. Measures supporting this form of energy are often considered to be inconsistent with WTO rules. This is because the exceptions that would allow the WTO system to justify such measures are usually applied in a textualist manner. After displaying the main provisions and the existing case law, we will draw some conclusions on the possibility of an evolving interpretation thereof, allowing smoother and easier trade in renewable energy. Section 4 will then argue OPEC’s production quotas compliance with the rules and principles established by the WTO. As a matter of fact, international institutions and agreements — such as the WTO and its framework — are designed to provide the stability and predictability necessary for economic growth, and OPEC’s monopoly and control over oil prices undermines the stability and transparency of the market for oil. Challenging such monopoly is necessary to level the playing field where all energy sources compete. In particular, as OPEC’s production quotas are here questioned, a WTO dispute involving quotas will be used for comparison.
Full Paper
Paolo Davide Farah
Founder, President and Director

‍Professor Paolo Davide Farah is Founder, President and Director of gLAWcal – Global Law Initiatives forSustainable Development, Associate Professor(with tenure) at West Virginia University, Eberly College of Arts and Sciences,John D. Rockefeller IV School of Policy and Politics, Department of Public Administration and “Internationally Renowned Professor/Distinguished Professor of Law” (Full Professor level) at Beijing Foreign Studies University (BFSU), Law School,Beijing, China.

Elena Cima
Research Associate

Summary

With greater importance given to the climate change debate, energy has slowly attracted the complete attention of the whole world. As a matter of fact, the main strategies identified by international bodies and institutions aimed at addressing the climatic issues faced by our planet constantly involve energy: both in terms of reducing the use of sources that increase emissions, and in terms of using them more efficiently. The energy sector can be roughly divided into renewable energy, on the one hand, and fossil fuels, on the other. The former category is at the core of all the main international agreements regarding climate change and current environmental concerns: the increasing exploitation of renewable energy sources has become an urgent matter and a possible route to reach this goal is to facilitate trade and exchange in renewable energy goods, services, and technologies, through trade liberalization. Another possible route to achieve the global goal of reducing CO2 emissions and protect the environment requires a diminished use of fossil fuels, such as coal and oil. As far as petroleum is concerned, the relevant market is completely controlled by a few actors, gathered in the Organization of Petroleum Exporting Countries (OPEC), which set prices and quotas as they please. It is clear from this picture that a central and fundamental role is played by international trade rules. Trade liberalization in renewable energy needs to be consistent with international trade rules, and so do OPEC’s practices. As we will see in section 2, energy is not explicitly covered by the Agreements of the World Trade Organization (WTO), which makes interpretation of this sector extremely important. Section 3 focuses on the possibility to use and interpret WTO Agreements in favor of the deployment and diffusion of renewable energies, in order to contribute to mitigation of and adaptation to climate change. Measures supporting this form of energy are often considered to be inconsistent with WTO rules. This is because the exceptions that would allow the WTO system to justify such measures are usually applied in a textualist manner. After displaying the main provisions and the existing case law, we will draw some conclusions on the possibility of an evolving interpretation thereof, allowing smoother and easier trade in renewable energy. Section 4 will then argue OPEC’s production quotas compliance with the rules and principles established by the WTO. As a matter of fact, international institutions and agreements — such as the WTO and its framework — are designed to provide the stability and predictability necessary for economic growth, and OPEC’s monopoly and control over oil prices undermines the stability and transparency of the market for oil. Challenging such monopoly is necessary to level the playing field where all energy sources compete. In particular, as OPEC’s production quotas are here questioned, a WTO dispute involving quotas will be used for comparison.

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